Recent days. I went and tested a full IK setup of hip/spin/lower chest/ upper chest within vrchat. To summary it works, the flexing is a bit different in destop, 3 point, and 5 point tracking but clearly used when observing bones flex and it can feel more natural in some cases because of that extra flex joint. It may not fix head in neck bending with FBT however because how the IK weakly pulls the head & neck together, which is somewhat hard to detail in this little post.

It's really just a oversight the SDK is still enforcing the spine setup and more freedom comes when its gone.

In the off chance the Cats devs read this, they could prepare the auto fix by keeping some hip to chest bones and not nuking them into a weightpaint merge. I found for some MMDs using the bone were the tail bone is as a new hip and flipping the bone that originally transform into the hip into the new spine (and then propagate the new lower and upper chest upwards) is a possible solution from self testing, it kinda depends how well the upper leg bones sits near the new hip however.

However a issue to the devs when users do this spine correction: doing this can break support for the REM eye system due to the unexpected hierarchy order so consider the pros/cons and improving support for eyes and blinks when correcting the SDK.